Options Trading News

Best Buy cratered in January, but traders apparently hope that a good earnings report next week will drive it higher.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 3,000 September 31.50 calls for $1.65 and the sale of 3,000 September 36.50 calls for $0.25 today. Equal-sized blocks traded in the September 30 calls, sold for $2.45, and the September 35s, which were bought for $0.45, but volume was below open interest in those.

It appears the investor rolled a bullish call spread, which originally involved buying the September 30s and selling the September 35s. Adjusting up to the higher strikes recovered $0.60 of premium and will hand them another $5 if the electronics retailer closes at $36.50 or higher on expiration. (See our Education section)

BBY is up 0.29 percent to $31.22 in afternoon trading. The stock last traded above $36 in mid-January before spiraling into the low-$20s on weak holiday sales. It's been rebounding since, with earnings beating expectations in the two most recent quarters.

Attention now focuses on the next report before the opening bell Tuesday. Today's trader is apparently targeting a rally back to BBY's levels before this year's big selloff.

Total option volume in Best Buy is almost twice average amounts, with overall calls outnumbering puts by almost 6 to 1.

optionMONSTER® provides stock market insight, advanced options education, and actionable trade ideas to meet the needs of do-it-yourself investors. After spending decades in the trading pits of Chicago, Jon 'DRJ' and Pete Najarian founded the company in 2005 to help people better manage their own investment portfolios.